Real Good Food PLC Year End Trading Update (6510I)

TIDMRGD

RNS Number : 6510I

Real Good Food PLC

20 April 2022

Real Good Food plc

("RGF" or "Group")

Year End Trading Update

Real Good Food plc (AIM:RGD) today provides the following update on trading for its financial year ended 31 March 2022.

Trading update

Revenue for the year ended 31 March 2022 was GBP40.5m, an increase of 9.0% on last year, but below the pre-pandemic prior year. Adjusted EBITDA was just under GBP0.7m compared to GBP0.2m in FY21, equating to an expected, much reduced, Loss before tax of GBP2.8m (2021: Loss before tax GBP6.1m). Overall, this performance is below that which the Board had anticipated exiting the half year.

Unaudited numbers:

 
                                FY22                               FY21                               FY20 
     GBP'm           Cake       Head    Continuing      Cake       Head    Continuing      Cake       Head    Continuing 
                  Decoration   Office   Operations   Decoration   Office   Operations   Decoration   Office   Operations 
   3rd Party 
     Revenue         40.5        -         40.5         37.3        -         37.3         41.2        -         41.2 
    Adjusted 
     EBITDA          0.9       (0.2)       0.7          0.3       (0.1)       0.2          1.4       (3.1)      (1.6) 
 (Loss)/Profit 
   Before Tax       (0.7)      (2.1)      (2.8)        (2.2)      (3.9)      (6.1)        (1.4)      (8.7)      (10.2) 
---------------  -----------  -------  -----------  -----------  -------  -----------  -----------  -------  -----------

*Continuing operations comprise JF Renshaw and Rainbow Dust Colours; excludes Brighter Foods Limited which was sold on 11 May 2021.

** Excludes goodwill impairment charges.

As previously reported, the Group performed strongly in H1 reporting revenue and EBITDA well ahead of prior year and back to pre-Covid levels (H1 FY20). However, revenues during Q3 (October - December 2021), the Group's seasonally busiest period, were disappointing and well below expectations due to severe shortages and erratic deliveries of key ingredients and services, compounded by high absence rates because of the Omicron variant; inevitably this affected the Group's ability to fulfil customer orders and the business continued to work closely with customers during this difficult period.

Trading in Q4 and in the first weeks of our new financial year continued to be impacted by these shortages and absences, whilst significant input cost increases have also dragged profitability down. RGF will continue to focus its efforts on products that are profitable and pass these unprecedented cost increases (in sugar, palm oil, energy, packaging and transport) through to its customers, but there is a lag effect of a few months. Overall, revenue in H2 was 7% lower than the prior year. Adjusted EBITDA for H2 was marginally positive (FY21: GBP0.8m).

Net debt as at 31 March 2022 was GBP25.3m (2021: GBP48.6m), a reduction of GBP23.3m during the year. The sale of Brighter Foods Limited on 11 May 2021, for cash proceeds to the Group of GBP35.6m, enabled GBP23.1m to be repaid to Loan Note Holders and GBP8.5m to be paid into the pension scheme to fully fund it on an ongoing basis. Cash from operations showed a net inflow of GBP0.3m.

Outlook

Given the challenging environment in terms of both cost and demand pressures, the Board is focused on reducing complexity and waste, other cost saving projects and selective new product launches to make the business as competitive as possible. With a significant milestone due in 2023 relating to the repayment of borrowings, the Group is focused on improving performance to meet these obligations.

Mike Holt, Executive Chairman commented:

"The last few months have been very difficult due to a number of issues relating to costs, supply chain and unavoidable staff absences leading to our performance for the financial year just ended being worse than we had hoped. The unprecedented cost increases being experienced by all businesses are being passed through to our customers but there is a timing lag which is impacting profitability. The Group is determined to hunker down, control costs and protect revenues, and has the support of its Loan Holders and major shareholders to navigate this difficult time."

Enquiries:

 
Real Good Food plc                                       Tel: 0151 541 3790 
 Mike Holt, Chairman 
 Maribeth Keeling, Group Finance Director 
 
finnCap Limited (Nomad and Broker)                       Tel: 020 7220 0500 
 Carl Holmes / James Thompson (Corporate 
 Finance) 
 
MHP Communications (Financial PR)                        Tel: 020 3128 8793 
 Reg Hoare                                                rgf@mhpc.com 
 About Real Good Food 
  Real Good Food plc is a food manufacturing business serving several market 
  sectors including retail (own label and private label), manufacturing and 
  export. The Company has two businesses, Cake Decoration (Renshaw and Rainbow 
  Dust Colours) and Food Ingredients (Brighter Foods), with leading brands 
  in their chosen markets. http://www.realgoodfoodplc.com

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END

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